College Football Winners Still Lose as Bowl Costs Exceed Payout

Rutgers University celebrated its 8- 4 record last football season with a trip to the St. Petersburg Bowl in Florida. Big East Conference schools got stuck with a $740,000 bill.

The Scarlet Knights’ story isn’t unique in college football. Payouts for all but the biggest bowl games seldom match teams’ expenses, and the rest of the schools in the conference have to subsidize them, according to financial records obtained by Bloomberg News using open records laws.

There were 33 bowls played last year, not including the national championship game. At least 13 schools spent more to play in the game than their conferences received in compensation. According to figures from public universities where open-records laws apply, those losses totaled more than $3.8 million, even as taxpayer subsidies for athletic departments are on the rise and athletic programs are falling deeper in debt.

“Bowls have become network-owned, commercial enterprises, in some cases, pitting average teams in money-losing bowls for the benefit of a few,” said Charles E. Young, 79, president emeritus at the University of Florida and a member of the Knight Commission on Intercollegiate Athletics. “I think the losses are higher than anyone knows.”

League commissioners including Wright Waters of the Sun Belt Conference, who are usually responsible for negotiating the money-losing bowl agreements, say these games aren’t about profit; they’re meant to promote the school and give athletes a chance to experience postseason play.

Find Balance

“At what point does the projected economic impact of a bowl reach the point where you say, ‘This makes sense, it’s a win-win,’” said New Mexico State Athletic Director McKinley Boston. “As opposed to, ‘You win, I subsidize your tourism business, and the economic impact is great for you, but it destroys everybody else’s budget.’”

This year, there will be 34 postseason bowl games excluding the national championship, ending Jan. 9 with the Fight Hunger Bowl. The championship game, pitting Auburn University against the University of Oregon, will be played the following day in Glendale, Arizona.

The five games comprising the Bowl Championship Series are the most lucrative. Six conferences -- the Atlantic Coast, Big East, Big Ten, Big 12, Pac-10 and Southeastern -- are under contract to send their champions to those bowls; each received $18.9 million last season, according to Bill Hancock, executive director of the Prairie Village, Kansas-based BCS.

Schools that play in lower-paying bowls burn up some of the money that is coming into the conference from the richest ones.

Rutgers’s Bill

The Big East, for instance, received $400,000 for Rutgers’s participation in the St. Petersburg Bowl last season, according to college sports’ governing body, the National Collegiate Athletic Association. It cost the Scarlet Knights $1.14 million to attend, according to Rutgers financial records. The league pools money from all of its bowl appearances, pays expenses to the teams that played in them, then divides the rest among all schools.

The difference in what Rutgers earned for the league by appearing in the bowl and what it spent to go came out of that pool, reducing the cut that each school got when the money is split up. Big East Commissioner John Marinatto wouldn’t disclose the formula the league uses to determine how much each university gets from bowl payouts.

According to Rutgers’s financial records, the conference gave the New Brunswick, New Jersey, school a $1.33 million revenue-sharing check -- based on the BCS distribution, bowl payouts and conference television revenue.

The Big East also booked losses from South Florida’s appearance in the International Bowl ($428,000) and Connecticut’s appearance in the Papajohns.com Bowl ($430,000), university records said.

Bowl Losses

Other examples of bowls where participants spent more to attend than they earned for their conferences in the payout include the New Mexico Bowl, where Fresno State spent $390,000 more than the Western Athletic Conference received; the Texas Bowl, where Missouri spent $467,000 more than the Big 12 Conference received; and the New Orleans Bowl, where Middle Tennessee State University’s appearance cost the Sun Belt Conference at least $50,000.

“I buy television, and I buy bowl access,” Sun Belt Commissioner Waters said in an interview. “I do it for the exposure for our schools and the enhancement of recruitment, and all the things that go with additional TV and bowl opportunities.”

An NCAA report released in August for fiscal year 2008-09 said 14 athletic departments of the 120 schools in college football’s bowl subdivision had an operating profit, down from 25 in 2006-07 and 2007-08.

Growth in athletic revenue slowed to 5.8 percent in 2008- 09, from 17 percent the previous year, while median expenses grew 10.9 percent, compared with 5.5 percent a year earlier, the report said.

Rutgers Debt

Rutgers is an example of a school that spent its way to national prominence, playing in five straight bowl games, while mired in debt.

The Scarlet Knights’ athletic department received almost half its $58.5 million in revenue in 2008-09 from state subsidies and student fees, with $17.9 million coming from the university and $7.8 million in student fees. The school cut six sports teams to reduce expenses in 2007. None of its programs were profitable in the fiscal year ended 2009, according to the school.

Rutgers Athletic Director Tim Pernetti said attending bowl games helps him build his football program and neither he nor the conference wants to give them up. Instead, they’ll look more closely at expenses.

“The best-case scenario is the payouts going up,” Pernetti said in an interview. “But we also have to focus on keeping our budget tight and constantly look for ways to trim costs.”

This year, Rutgers finished 4-8 and won’t play in a bowl.

Change Unlikely

Former Stanford Athletic Director Ted Leland, now vice president for external relations at the University of the Pacific in Stockton, California, says the system isn’t likely to change.

“It’s too late to put any kind of controls on the conferences anymore,” Leland said in an interview. “Everyone’s economic interests from the coaches to the commissioners are aligned now and they all benefit from playing in a bowl game.”

Leland notes that teams can qualify for a bowl with a 6-6 regular-season record and a losing conference mark. Texas A&M (6-6 overall, 3-5 in the Big 12), Minnesota (6-6, 3-5 in the Big Ten) and UCLA (6-6, 3-6 in the Pac 10) were among eight teams that played in a bowl game last year without posting a winning record.

Bowl Participants

This year, 14 schools will play in a bowl game after finishing 6-6. Illinois, Georgia and Tennessee are among them.

“If you are a conference commissioner and vote not to go to a bowl game, you’d lose your job,” Leland said. “The athletic director would be viewed as disloyal to the football program and to the coaches who want their bonuses.”

The NCAA says the responsibility of signing contracts with bowls falls directly on the conferences. The NCAA has no plans to require bowls to increase payouts enough to cover teams’ expenses, something that would probably decrease the number of bowls, said Nick Carparelli Jr., chairman of the organization’s bowl licensing subcommittee and Big East Conference associate commissioner.

Requiring bowl owners to reimburse school expenses would be foolish because they’d have no control over those costs, said Pete Derzis, senior vice president and general manager of ESPN Regional Television. The Walt Disney Co.-owned network televised 73 percent of bowl games last year and owned seven, according to the company.

‘Arbitrary’ Number

“I don’t think we would be willing to meet some arbitrary expense line-item that some institution submits,” Derzis said in an interview. “Our expectation is that the conferences know what they need to make their business work.”

Bowls have their roots in promoting tourism. Michigan played Stanford in 1902 in what would become the Rose Bowl in an effort by organizers to show off Pasadena, California’s weather to Easterners, according to the Rose Bowl’s history.

Today, hosts still benefit. The New Orleans Bowl in Louisiana last year, where 30,228 people watched Middle Tennessee defeat Southern Mississippi, had an economic impact of $15 million, according to the New Orleans Convention and Visitors Bureau. The five BCS games in January 2009 had an economic impact of about $1.2 billion on the host cities (Miami, New Orleans, Pasadena and Glendale), according to the BCS website.

Ticket Sales

The Mid-American Conference had negotiated an agreement with the Little Caesars Pizza Bowl where their school’s payout was based solely on how many tickets it could sell, Ohio University Associate Athletic Director Dan Hauser said in an interview.

The Athens, Ohio, school received 10,000 tickets valued at $450,000. It sold 2,181 tickets, generating $98,150, for a game in Detroit about 278 miles north, at 1 p.m. the day after Christmas.

Since its expenses were $164,464, the school lost $66,314 playing in the game, according to university records.

“There was a cost, but this is our business,” Hauser said. “We’re about getting kids to the postseason in every sport, men’s and women’s. And they all cost money.”

Extra Practice

Athletic directors like Rutgers’ Pernetti and Idaho’s Rob Spear say one of the biggest advantages in playing a bowl game is the extra two weeks of practice coaches get to work with underclassmen. The NCAA limits the number of practices a team can have each season, but gives bowl teams an additional two weeks.

“Where it really made the difference was this spring,” Spear said in an interview. “We are getting into more homes and we’ve been able to talk to better caliber student athletes. Does that mean we’ll get that kid at the end of the day? I don’t know, but at least it opens the door.”

Bowls also mean payouts to coaches and administrators.

Rutgers paid $186,250 to the coaching staff for its participation in the St. Petersburg Bowl, including $50,000 to head coach Greg Schiano. Non-football staff received another $89,517. Pernetti didn’t get a bonus, according to the school.

Pernetti said even the greatest supporters of money-losing bowls are being forced to consider the expense of playing in the games.

“There has not been an AD meeting with the commissioner and league where we have not discussed the issue,” Pernetti said. “We talk about it constantly.”

To contact the reporter on this story: Curtis Eichelberger in Washington at ceichelberge@bloomberg.net

To contact the editor responsible for this story: Michael Sillup at msillup@bloomberg.net

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